5 Reasons Direct-to-Consumer Marketers Should Invest in CTV and OTT
Even before the pandemic hit, cord-cutting audiences had already begun to shift away from linear TV toward connected TV (CTV) and over-the-top (OTT) streaming media channels. When Covid-related lockdowns went into place last year, CTV/OTT viewership skyrocketed, led by major OTT streaming services like Netflix, Hulu, Sling, Amazon Prime Video, and Disney+, among others.
As OTT viewership surged in 2020, so did the ad dollars spent on the channel by marketers looking to connect with consumers. This year, advertisers are expected to invest over $3 billion more in CTV/OTT than they did in 2020. In fact, U.S. marketers are on track to more than double spending in 2020, reaching $18.29 billion by 2024. However, for direct-to-consumer (DTC) brands specifically, the move has been much slower. Instead, most have continued to allocate the majority of their budget to social and search—their longtime go-to channels for customer acquisition.
But among DTC brands who have invested in the space, it’s been decidedly worthwhile: 43% say they’ll spend more in the first half of 2022, and among those who haven’t allocated budget for CTV/OTT yet, nearly a third say they plan to do so sometime in the future.
For DTC marketers who are still on the fence or unsure of whether the CTV/OTT opportunity is worth a larger share of their budget, here are five reasons why it should be part of the marketing mix.
- Deliver ads within a high-quality, engaging environment. Trust is down in both traditional media channels, which reached its lowest point in five years, and social media, which reached a new record low. As trust in these platforms erodes, DTC brands may be experiencing diminishing returns and seeing a decline in advertising engagement. Consumer data privacy concerns, deceptive content, and the sometimes-toxic nature of social media discourse have a significant impact on users’ likelihood to engage with ads or sponsored content within these environments. CTV/OTT doesn’t suffer those same trust issues, making it more likely that viewers will interact with ads given the high-quality, lean-in format of these channels.
- Take advantage of greater scale and unique inventory options. While the social and search spaces have become saturated, CTV/OTT provides a much broader selection of platforms and devices for DTC brands to reach audiences on. From generalized OTT publishers like Hulu, Roku, and Pluto TV to network-specific streaming services like A+E, ESPN+, and Discovery+, there are dozens of inventory options. In fact, there are so many to choose from, it is wise to work with an experienced media partner who can help you navigate the complex CTV/OTT ad landscape, provide direct access to these inventory sources, and utilize your budget effectively.
- Achieve more precise personalization. Just as DTC customers want the curated, personalized experience they get from their favorite DTC brands, CTV/OTT advertising provides the same capability. In fact, nearly one-fourth of DTC marketers say the advanced targeting capabilities of the channel are one of the best benefits. Again, with so many targeting levers available, —platform, device, geography, viewing behavior, etc.—working with a savvy partner can help you make the most of these capabilities without having to go all-in with one specific insertion order. For example, if your brand decides to shift budget from one OTT publisher to another, your media partner can do that within the confines of their own buying agreements with the OTT provider, giving your brand much greater flexibility.
- Leverage direct attribution measurement. For direct-to-consumer brands, every dollar spent on media should ultimately tie back to sales. While upper-funnel metrics like brand lift are certainly valuable, attributing direct sales and return on ad spend (ROAS) is even better. With the right data partner, DTC brands can measure the specific actions users take as a result of being exposed to the brand’s OTT ad (i.e., after seeing the brand’s ad, did they purchase your product? Download your app? Visit one of your physical store locations?). This full-funnel attribution helps marketers understand exactly which creatives, audiences, geolocations, publishers, dayparts, or other variables are driving the most action. And, with real-time optimization and reporting, you can make adjustments on the fly to fully maximize campaign results.
- The channel is ripe for disruption and growth. DTC brands are all about differentiation—the unique, curated experience they provide compared to competitors and traditional retail. CTV/OTT gives them an opportunity to differentiate their brand in a relatively untapped market. While most DTC brands are still focused on social and search, DTC shoppers are moving away from social toward streaming TV—roughly 70% of DTC consumers say they spend more time watching streaming TV each week (around 13 hours) than on social media. Because this channel is still relatively undiscovered by most DTC brands, it’s a prime opportunity to grab the attention of this valuable audience before your competitors do.
There’s never been a better time to make the move to CTV/OTT. Regardless of the path you choose, as audiences increasingly turn their attention to streaming media, DTC brands can’t afford to get left behind. Allocating some budget for CTV/OTT in the coming year is a smart investment that will put your brand ahead of the competition and in front of active, engaged audiences.
Brittany Paril is product insights marketing manager at Digital Remedy.